Agency & Opportunities Overview

June 2016

Agenda

2

1. Argentina Investment Opportunity

2. Overview of the Investment & Trade Promotion Agency

3

Argentina’s Value Proposition

Wide natural

resources

availability

Wide natural

resources

availability

High quality

human

resources

High quality

human

resources

Nationwide

infrastructure

coverage

Nationwide

infrastructure

coverage

Improving

institutional

framework

Improving

institutional

framework

• 8th largest country in the world, with 53% of arable land (13% developed)

• Large oil & gas (conventional and unconventional) and mineral reserves

• Abundant food, water and renewable energy resources (wind and solar)

• 8th largest country in the world, with 53% of arable land (13% developed)

• Large oil & gas (conventional and unconventional) and mineral reserves

• Abundant food, water and renewable energy resources (wind and solar)

• Strong labor force, renowned for its technical skills, creativity and versatility

• #1 in Latin America in Human Development and Education Indexes

• High literacy rate of 98% ~110,000 higher education graduates per year

• Strong labor force, renowned for its technical skills, creativity and versatility

• #1 in Latin America in Human Development and Education Indexes

• High literacy rate of 98% ~110,000 higher education graduates per year

• Nationwide road & railroad systems (+35,000 km), 43 ports & 54 airports

• High connectivity, with 75% broadband and 141% mobile penetration

• Extensive energy coverage with natural gas pipelines and electricity grids

• Nationwide road & railroad systems (+35,000 km), 43 ports & 54 airports

• High connectivity, with 75% broadband and 141% mobile penetration

• Extensive energy coverage with natural gas pipelines and electricity grids

• 30+ years of democratic governments

• Strategic relationships and bilateral treaties; G20, Mercosur, UNASUR

• Member of World Bank’s Int. Centre for Settlement of Investment Disputes

• 30+ years of democratic governments

• Strategic relationships and bilateral treaties; G20, Mercosur, UNASUR

• Member of World Bank’s Int. Centre for Settlement of Investment Disputes

STRONG FUNDAMENTALS TO BECOME A REGIONAL ECONOMIC ENGINE

Large and

diversified

economy

Large and

diversified

economy

• 3rd largest economy in LatAm, with a GDP of +U$ 500 Bn (after BR and MEX)

• 2nd highest GDP per capita in PPP terms in the region (after CHL)

• +40 MM pop, with ~ 7% unemployment rate, which 75% from services

• 3rd largest economy in LatAm, with a GDP of +U$ 500 Bn (after BR and MEX)

• 2nd highest GDP per capita in PPP terms in the region (after CHL)

• +40 MM pop, with ~ 7% unemployment rate, which 75% from services

4

Argentina Investment Levels vs. LatAm

0

10

20

30%

Total Investment

(Avg. 2008-2014, as % of GDP)

PER

27.1%

COL

25.8%

CHL

24.6%

MEX

21.7%

BRA

21.5%

ARG

20.8%

Foreign Direct

Investment

0

20

40

60

80

Foreing Direct Investment

(Avg. US$ Bn/Year)

12.5

65.8

9.4

26.4

3.4

19.6

1.9

12.4

1.5

8.4 7.1 8.9

2.2% 1.8% 4.8% 1.8% 2.0% 3.0%1990-'00

3.0% 2.3% 8.4% 3.9% 5.1% 1.7%2008-'14

1990-2000

2008-2014

% of GDP

GENERAL INVESTMENT LEVELS FOREIGN DIRECT INVESTMENT

Re-invested dividends and

intercompany loans (capital

controls) represented

~72% of FDI in 2008-14

• Investment in Argentina is ~4-5 percentage points of GDP

below other LatAm countries

- It is estimated that an additional U$ 25 Bn/yr. is required

• FDI in LatAm grew from ~U$28 Bn/year in the 90’s to

~U$126 Bn/year in the last five years (4.5x times)

- Argentina’s share fell from 16% to 5%

5.2x

2.8x

5.8x6.5x

5.6x

5

WEF Survey: Main Concerns for Argentina

(% of total responses)

24

6

11

11

13

17

18

Other concerns

Govt. bureaucracy

Corruption

Tax levels

Access to financing

FX Restrictions

Inflation

ARGENTINA FACES SHORT-TERM CHALLENGES …

…THAT THE NEW ADMINISTRATION HAS

BEGUN TACKLING TO GET BACK ON TRACK

An Agenda for Change is Underway

Country risk has already declined from 620bp in

September 2015 to 450bp in March 2016

� Removal of capital/repatriation restrictions

� Free floating rate and recovery of int. reserves

� Negotiated and closed hold-out debt default to

regain access to global capital and financial markets

� Inflation targeting to reach single-digit CPI in 4 years

� Removal of export taxes and import restrictions

� Creation of Investment & Trade Promotion Agency

• New regulatory framework to promote investment

via Public-Private Partnership (PPP)

• 4-year plan to eliminate primary fiscal deficit

(reduction of government subsidies and spend)

• Re-launching of national bureau of statistics (Indec)

CHL

35

MEX

57

COL

61

PER

69

BRA

75

ARG

106World Competitive Index

Country Rankings

• Unconventional O&G

(Shale & Tight) Fields and

Infrastructure >20Bn

• 11GW of Hydro/Thermal

Power plants, >20Bn

• Mining lithium, gold,

copper, potash >15Bn

• 10GW of Renewable

Energy >15Bn

• Petrochemical >6Bn

ENERGY & MINING

• ~25.000 Km of roads &

highways >25Bn

• Water and Sewage

infrastructure >20Bn

• ~10.000 km of railway

freight lines >15Bn

• Real Estate & Housing

developments >10Bn

• Cellular networks >5Bn

• Airports and ports >2Bn

INFRASTRUCTURE

• Automotive industry

• Food & Beverage

• Consumer products

• Electronics and

technology products

• Machinery & Equipment

• Basic materials

• Textiles and fashion

INDUSTRIAL GOODS

• Professional services

(BPO, call centers)

• Biotechnology

• Pharma

• Software development

• Tourism

• Health services

• Education services

TECH & SERVICES

>U$ 75 Bn >U$ 75 Bn >U$ 5 Bn >U$ 2 Bn

6

• Land development with

irrigation (4M Ha) >8Bn

• Animal protein (beef,

pork, poultry) >5Bn

• Forestry and pulp

industry >2.5Bn

• Food industrialization

>0.5Bn

AGRIBUSINESS

>U$ 15 Bn

Investment Opportunities

OVER U$170 BN OF INVESTMENTS HAVE BEEN IDENTIFIED ACROSS MULTIPLE SECTORS

7

Summary of the Opportunity

ARGENTINA WILL BECOME AN ATTRACTIVE INVESTMENT DESTINATION

• Sizeable and attractive market (domestic and regional)

• Large availability of world class natural resources

• Talented and affordable human capital

• Opportunities and investment needs across most sectors

• Strong economic and institutional recovery already in progress

• Under-valued assets and under-leveraged private sector

• Adequate infrastructure already in place, but much more underway

1

2

3

4

5

6

7

Agenda

8

1. Argentina Investment Opportunity

2. Overview of the Investment & Trade Promotion Agency

Assist investors throughout the analysis, decision,

development and execution phases of their projects

Work with ministries, congressmen and regulators to

build an attractive regulatory framework for investors

Help local companies expand their frontiers and

establish themselves in international value chains

Our Strategic Goals

Facilitate Argentina’s economic integration with the world

Promote job creation and economic development, while reducing

poverty

Contribute to develop sustainable competitive advantages, focusing

on high value-added economic activities

1

2

3

OUR GOALS

DELIVERY

PLATFORM

INVESTOR SERVICING

POLICY ADVOCACY

TRADE PROMOTION

9

THE AGENCY WAS CREATED IN EARLY 2016 TO PROMOTE INVESTMENT AND FOREIGN TRADE

Scope of Our Services

High value-added services under a multi-disciplinary approach

• Engage with government

entities to facilitate and fast-

track processes

• Develop ad-hoc analysis (on

opportunities, regulations, etc.)

for potential investors

• Provide updated statistics and

sector-specific information

• Assist investors in conflict

resolution throughout the

investment lifetime

INVESTOR SERVICING

• Develop recommendations on

regulatory reforms to simplify

investment processes

• Support changes in laws and

regulation that promote trade

and investment and improve

the business environment

• Advocate for new treaties and

alliances that enhance

international integration

• Coordinate sector-specific

promotion initiatives

POLICY ADVOCACY

• Perform company analysis and

training to strengthen their

exporting capabilities

• Plan, execute and evaluate

trade fairs and business rounds

• Market intelligence, profiling of

markets and commercial trends

• Create clusters of companies

grouped by region or sector to

increase their export potential

TRADE PROMOTION

10

We provide an agile, professional, transparent, committed and results-oriented service to companies

WE AIM TO HELP COMPANIES UNLOCK THEIR POTENTIAL, BOTH INSIDE AND OUTSIDE THE COUNTRY

Interaction with Business and Government Ecosystem

Sector-specific information, programs, regulatory framework

CAPITAL FLOWS

TAX LEGAL

PERMITSMinistries

Foreign Affairs

MinistryProvinces

Municipalities

Industry Chambers

Secretariats

Associations

StrategicPartners

Embassies & Consulates

Private, state-owned, & multilateral

banks

President /Chief of

Staff

Big 4, managementconsultants

Regional Promotion Agencies

Ministerial IPAs

Financing Programs

Foreign Consultants

AGENCY

11

Tax/legal paperwork, permits, approvals, registrations

We act as a single-point-of-contact for all investment projects, independently of their sectors and origins

AGENCY

“BRIDGING THE GAP” BETWEEN PRIVATE AND PUBLIC SECTORS IS A KEY TO SUCCESS

STRATEGIC ISSUES ADMINISTRATIVE ISSUES

Our Guiding Principles

• Become a strategic partner to companies to invest and export to the world

• Facilitate investment processes and improve general business climate

• Create a professional and collaborative culture with focus on results

• Promote the highest ethical standards in the entire ecosystem

• Make Argentina a better and more transparent place to conduct business

12

1

2

3

4

5

WE HAVE SET HIGH GOALS FOR OUR AGENCY

Argentina Investment + Business Forum – Save the date!

13

• “Argentina to the World”

- Opportunity to learn about investment opportunities

and plans from Government officials and Private

sector senior executives

- Focus on Infrastructure, Transport, Energy, Mining,

Industry, Agribusiness, Innovation & Tech

• Three day event to be held in Q3-2016 in BA

• Expected attendance of 1,500+ renowned global

leaders:

- Thought leaders

- Country and Global leaders

- CEOs of large global and local companies

EVENT HIGHLIGHTS

Argentina Investment & Trade Promotion Agency

Juan M. ProcacciniExecutive President

Presidencia@exportar.org.ar

Agenda

15

1. Argentina Investment Opportunity

2. Overview of the Investment & Trade Promotion Agency

3. Appendix

2

4

6

8

10

12

14

16

Peso Exchange Rate

(AR$ per US$)

MarJu

nSe

pD

ecM

arJu

nSe

pD

ecM

arJu

nSe

pD

ecM

arJu

nSe

pD

ecM

arJu

nSe

pD

ecM

ar

Market Rate

Official Rate

16

Macroeconomic Indicators

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

GDP Growth (% rate, in constant prices)

3.0

-4.7

8.9

5.0

-0.9

1.7

-1.1

1.9

2008 2009 2010 2011 2012 2013 2014 2015

15

20

25

30

35

40%

Consumer Prices Inflation Rate

(% annual growth)

2008 2009 2010 2011 2012 2013 2014 2015

capital

controls

capital

controls

-7-6-5-4-3-2-101234

3.7

1.91.4

-0.5

0.7

-0.2

0.2

-3.0-2.7-2.6-3.0-3.0

-5.8

National Govt. Primary Surplus / Deficit(as % of GDP)

• Near 0% GDP growth in the

last 4 years

• Consumption and inflation

fueled by government

expenditures

• Annual inflation levels of

25-35% due to strong

monetary expansion

• In 2015 the primary deficit

reached 5.8% of GDP, ~50%

were energy subsidies

• Dual exchange rate as a

consequence of restricted

access to FX market

• Reserves fell from U$ 50 Bn

in 2011 to U$ 25 Bn in 2015

capital

controls

2011 2012 2013 2014 2015 2016

STAGFLATION CONTEXT SINCE THE BEGINNING OF CAPITAL CONTROLS

STEADY WEAKENING OF FISCAL ACCOUNTS AND EXCHANGE RATE

Govt. Primary Balance

(as % of GDP)

17

General Leverage LevelsA

rge

nti

na

19

%P

eru

29

%C

olo

mb

ia

30

%B

razi

l3

8%

Ch

ile8

6%

Ru

ssia

40

%In

dia

45

%C

hin

a1

25

%

Ge

rma

ny

54

%U

SA6

7%

UK

86

%Fr

an

ce1

21

%

HOUSEHOLD DEBT

• Low leverage levels across corporate, private and public sectors

CORPORATE DEBT SOVEREIGN DEBT

Me

xico

7%

Arg

en

tin

a7

%

Co

lom

bia

1

5%

Bra

zil

21

%

Ch

ile3

6%

Ind

ia9

%

Ge

rma

ny

53

%

Fra

nce

55

%

UK

74

%

USA

81

%

Ch

ile1

8%

Pe

ru2

2%

Co

lom

bia

5

1%

Me

xico

52

%A

rge

nti

na

52

%B

razi

l7

0%

Ru

ssia

20

%C

hin

a4

3%

Ind

ia6

5%

Ge

rma

ny

71

%U

K8

9%

Fra

nce

97

%U

SA1

05

%

Selected

LATAM

Other

EM

Devp’d

World

Selected

LATAM

Other

EM

Devp’d

World

Selected

LATAM

Other

EM

Devp’d

World

Source: McKinsey Global Institute, BCRA, IMF

AGRIBUSINESSAGRIBUSINESSMININGMINING

INFRASTRUCTUREINFRASTRUCTURE

18

• Abundant mineral reserves with good

mining grades: copper, gold, silver,

potassium

• ~75% of potential mining surface unexplored

• High-purity lithium production in the “Lithium Triangle”

Opportunities in Selected

Sectors• Development of more than 4M Ha by

artificial irrigation systems

• Expansion of the forestry and cellulose, paper and

wood industries

• Great conditions for animal protein

production: beef, pigs, chicken

• Increased food industrialization

Investment Opportunities in Selected Sectors

2

3 4

• Ambitious renewable energy mandate (10GW by 2025)

• Over 10GW of new baseload generation capacity and

transmission infrastructure needed

• Largest shale oil/gas play outside USA (“Vaca

Muerta”) with great production potential

• Large conventional oil and gas reserves

• Development of offshore and biofuels

ENERGYENERGY1

• Construction and improvement of roads and highways

• Enhancement of freight and passenger railway networks

• Economic integration of the North-Western

part of the country (Plan Belgrano)

• Metropolitan area transportation

(bus, trains, stations and crossings)

• Airports improvement

19

Energy: Attractive Renewables and Unconventional O&G

markets under development

POWER GENERATION: RENEWABLES TARGET

OF 20% OF CONSUMPTION SHALL BE MET BY 2025

UNCONVENTIONAL O&G: “VACA MUERTA” PLAY

HAS WORLD-SCALE POTENTIAL

0

20

40

60

80

100%

2015

64%

30%

4%2%

2025 Proyection

Thermal

43%

Hidroelectric

27%

Nuclear

10%

Renewable

20%

Energy consumption breakdown Addt’l Capacity

10 GW

1,5 GW

3 GW

8 GW

• Investments of U$15B needed to meet renewables target

• Great conditions for wind, solar, biomass and small hydro

• Government Commitment and Support:

- Competitive prices under guaranteed long term PPAs

- Tax incentives (accelerated depreciation, levied import duties, etc)

- Financing to renewable energy projects

• >10GW of large baseload plants (thermal/hydro) needed

• Argentina holds the world’s 2nd largest shale gas and 4th

largest shale oil reserves

• Vaca Muerta is the largest shale oil & gas play outside

the US, with 4+ years of cumulative development

⁻ Area of 30,000 km2 with ~300m of shale layer at

~3,500m of depth (with 3-5% of Total O&G Content)

⁻ JVs between YPF and Chevron, Dow, Pampa, Petronas

1

Shale Oil Reserves

(Bill. Barrels)

Shale Gas Reserves

(Trill. Cubic feet)

Source: Ministry of Energy and Mining, EIA

2025 Projected

20

Infrastructure: Ambitious development plans for roads &

highways, railways and airports

ROADS: IMPROVEMENT AND

CONSTRUCTION OF HIGHWAYS

RAIL FREIGHT: REHABILITATION OF

THE ENTIRE NETWORK

Goal: To develop infrastructure that benefits productive corridors, strengthens logistics networks,

and creates strategic connectivity to promote investment and trade

2

2015

AIRPORTS: MODERNIZATION &

INCREASE OF FLIGHT USAGE

2027

• ~40% of roads currently are in poor

conditions

• Only 2.800km of highways in place

• Plan 2027:

- 11.400km of total highways

- 13.000km of roads in good conditions

- Investment of 28.000M USD needed

• Growth by 2x of air traffic expected

by 2020 (10M to 20M passengers)

• Greater international connections

• Plan 2019:

- 14 airports modernized of by 2019

- Investments of USD 900M needed

• Only 5% of freight is transported by

railway (18M tones)

• Average speed of ~12-15km/h

• Plan 2027:

- 10.000 km of refurbished rails

- 80-100M tones transported

- Investment 15.000M USD needed

Source: Ministry of Transportation

0 20 40 60 80 100 120

Potential

Current

Thousand Troy Ounces

0 500 1,000 1,500 2,000 2,500

Potential

Current

Thousand Troy Ounces

0 200 400 600 800

Potential

Current

Thousand Tonnes

0 20 40 60 80 100 120

Potential

Current

Thousand Tonnes

21

Mining: Abundant reserves of Copper, Silver, Gold, Lithium

and Potassium

SIGNIFICANT MINING POTENTIAL WITH ~75%

UNEXPLORED SURFACE

IMPORTANT OPPORTUNITIES IN GOLD, SILVER, COPPER

AND LITHIUM

3

Gold

Copper

Uranium

Polymetallic

Lithium

Lead-Zinc

Iron

Prospective areas

Legend:

• 750,000 Km2 of high

potential mining areas

• 183,000 Km2 of granted

mining rights

⁻ 25 advanced prospects

⁻ 14 production mines

• +U$15Bn needed to develop Copper, Silver, Gold, Lithium and

Potassium opportunities

Source: Ministry of Energy and Mining

• ~75% of the mining surface remains unexplored

• As of 2016, no export taxes for mining products

# 15

# 12

WORLD

RANKING

# 11

# 4

# 14

# 8

# 3

# 1

Silver

Gold

Copper

Lithium

14x

2x

3x

5x

22

Agribusiness: Opportunities in Irrigation, Cattle raising,

Forestry/cellulose/paper and Food industrialization

ARGENTINA HAS EXCELLENT AGRICULTURE

CONDITIONS AND FULL GOVERNMENT SUPPORT…

…BUT THERE ARE STILL MANY OPPORTUNITIES FOR

FURTHER DEVELOPMENT

4

Development of more than 4M Ha with

artificial irrigation

Investment: 8.000M USD

Cattle raising expansion– 10M cows,

200K pigs and 1,5B chicken

Investment: +5.000M USD

Expansion of the forestry and cellulose

industry by ~1M ton/year

Investment: 2.500M USD

Increased food industrialization (milling,

wine, canned and frozen food)

Investment: +500M USD

• Farming conditions:

- Mild Climate with abundant rainfall

- Rich soils with low fertilizer needs

- Exceptional human resources, long farming tradition

- High technology adoption in crop genetics (>65% GMO)

- Unparalleled logistics with 100% storage capacity

• Government support: one of the first measures adopted by

President Macri’s administration was the elimination of

export taxes to wheat, corn, meat and regional products

0

200

400

600

800

1,000

2015

400

2020+

800

Argentina´s food production

(Millon people)

x2

2015 Argentine production

2.8M Tons produced

11th meat exporter (265MT)

59M tons production

1st soyoil exporter (6Mt)

2nd soymeal exporter (32Mt)

3rd bean exporter (12Mt)

27M tons production

3rd world exporter (17Mt)

Source: Ministry of Agriculture